Market Consolidation in Low VIX environment & Navigating Regulatory Clampdowns
Performance recaps last month and current month
The Indian stock market has witnessed volatility with uptrend in June month and traded throughout within range of 1000 points of nifty between 24500 and 25500 touching lower and upper end few times with closing at upper end. Nifty has rallied 3.1% in Jun with nifty closing at 25717 and Sensex closing at 83606. This month so far market has witnessed tight consolidation with low volatility and trading between 25000 and 25500 with nifty down by -1.6%. There are various factors impacting the markets, favourable ones being continuous DII buying of Rs 56k crores in June and Rs 72k crores in this month so far and also FII has been net buyers during this month, high GST collections, stabilizing of crude oil prices, global markets rally. Various Factors causing uncertainties are the US tariff policy matter, higher valuations in pockets, latest corporate earnings announcements and geo political risks. Indian market has during this period underperformed US and most global markets which are near all time high.
Key event highlight – SEBI action on proprietary trading firm Jane Street
Indian capital markets regulator SEBI grabbed global financial media headlines with its stunning order in first week of July against trading firm Jane Street on grounds of market manipulation. The order accuses the New York-headquartered high-frequency trading firm of a “sinister scheme” to manipulate Indian stocks and derivatives markets to make a ton of profits. It bans the Jane Street group from any activity in the stock market and has asked it to pay back Rs 4,843 crore of “illegal gains”. What has stunned the global markets is the mountain of granular detail that SEBI has presented to prove the alleged “manipulation”. Jane Street has yet to contest the order at India’s Securities Appellate Tribunal, but it has denied the charges. Jane Street reacts to SEBI ban, says ‘committed to operating in compliance’, further said it disputes the findings of the SEBI interim order and will further engage with the regulator.
SEBI, in its 105-page order, alleged that Jane Street and its India incorporated entities took large derivative positions to manipulate the Bank Nifty index, a grouping of 12 financial sector firms and a favourite in the derivative markets. “This is an unusual case where prima facie, multiple liquid stocks with high retail participation have together been manipulated to facilitate the manipulation of the index options market, resulting in massive profits for the manipulators, at the cost of other participants and retail traders,” the order said. The regulator said that by incorporating entities in India, Jane Street also managed to “work around” Indian regulations that prohibit foreign portfolio investors from undertaking intraday positions in the cash market. Overall, Jane Street made a profit of Rs 36,500 crore during the examination period between January 2023 and March 2025, SEBI said in its order.
SEBI further confirmed as on date that Jane Street has complied with its order to deposit Rs 4,843.5 crore in an escrow account. SEBI also mentioned that the request by Jane Street for removal of certain conditional restrictions is under consideration. SEBI is still investigating the trades of Jane Street Group, which will include trades in other indices and stock and may take additional 6-7 months to complete. Also, Jane Street Group can trade but will have to comply with SEBI directive of not using strategies which are considered manipulative. SEBI Chairman Tuhin Kanta Pandey said that the surveillance measures are very strong and regulator is keeping a close watch, referring to incidents like Jane Street. He emphasised that market manipulation will not be tolerated.
Sectoral performance
The sectors witnessed volatility in line with the market. Star performing sectors of Jun month are Infrastructure 5% and IT & Realty 4%, Metals 3.5% with smallcap rally of 6% and midcap 4%. Laggards of May month are FMCG -1%, Energy and Auto 1%. Similarly best performing sectors so far this month are FMCG 3.5%, Pharma 3%, most others are down in line with Nifty 50 and the biggest laggard has been IT down -4.7% based on higher valuations and latest corporate results of some major companies. The sector and stock wise performance this month and next month will be based on corporate results, news & events. As a prudent practice, Investors should remain diversified across sectors and stocks considering valuations and other factors from risk management perspective.
Global Market outlook including commodity
The global economy continues to face challenges as mentioned in the past like steady growth, lingering inflation, uncertain policy environments, tariff trade war, geo political events. US Debt, Interest rate and trade tariff as it unfolds also remains major cause of concern for global markets. Hence, the volatility may continue despite resilience shown by the markets amidst valuation concerns. Gold & Silver have made new life time highs recently with minor corrections in between. However whether it will sustain this elevated valuation is a key concern. Still holding them and prudent rebalancing in the portfolio diversify risk and offer stability. Gold is currently trading at Rs 99k/ 10 gm and Silver at Rs 115k/ 1kg
Outlook for the Indian Market
Long term Investment is not about timing the market but following disciplined investing in systematic manner over long term with diversification, based on financial goals and risk tolerance. The outlook remains sideways with volatility for this month. Global market, events and corporate earnings will further drive the market. Further, consult your investment advisor for prudent financial practices.
Fundamental outlook: Indian market witnessed volatility recently and Nifty is just 4% away from all time high of 26277. Increasing IPOs issue and participation are positive for the market. Low VIX environment indicates stability to mild uptrend. Some sectors and stocks are at lifetime high, hence Nifty may likely touch life time high soon this year. Further sectors and stocks results will also impact Nifty and broader markets.
Technical outlook: Indian market is sideways with low volatility based on technical parameters. Nifty is trading above most key moving averages. Nifty is trading at monthly RSI of 65 and weekly RSI of 58 which indicates mild uptrend. Nifty immediate support seen at 24850, major support at 24500, immediate resistance seen at 25650 and major resistance at 26000.
